Business

Safe-haven dollar sluggish as banking fears ebb; yen drops

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1 year ago

March 29, 2023

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The safe-haven U.S. dollar struggled to find its footing on Wednesday following two days of losses as global financial markets regained a measure of stability on hopes a full-blown banking crisis can be averted.

The dollar index , which tracks the currency against six major peers, edged 0.08% higher to 102.57 in Asian trading, following drops of about 0.3% in each of the past two sessions. The weakness comes despite a rise in U.S. Treasury yields, also the result of ebbing demand for the safest assets.

The yen remained volatile in the run-up to the end of the Japanese fiscal year on Friday. The dollar jumped 0.59% to 131.68 yen , and touched a one-week high of 131.80.

The yen had dropped 0.5% the previous day, when it uncharacteristically moved in the opposite direction with long-term U.S. Treasury yields.

The 10-year benchmark U.S. yield pushed as much as 1.5 basis points higher to a fresh one-week peak at 3.583% in Tokyo trading, but was last little changed at 3.5677%. Last Friday, the yield had dropped to a six-month low of 3.285%.

“U.S. bond volatility has driven most of the volatility in dollar-yen, so it makes sense that we’re closer to 130 than 140 because U.S. yields are that much lower,” said Ray Attrill, head of foreign-exchange strategy at National Australia Bank.

Regarding Tuesday yen’s rally, “it’s not following the rules as one might expect, which maybe says that coming into fiscal year-end, must-do flows are having a disproportionate effect,” Attrill added.

Elsewhere, the Australian dollar slipped 0.16% to $0.6698 after a reading of Australian consumer inflation slowed to an eight-month low, adding to the case for the Reserve Bank to pause its rate hiking campaign next week. Futures now imply only a 5% chance of a rate rise, compared to 15% before the data.

The U.S. currency has lost ground as investors took solace in First Citizens BancShares’ agreement to buy all of failed lender Silicon Valley Bank’s deposits and loans, as well as overnight comments by Michael Barr, the Federal Reserve’s vice chairman for supervision, that SVB’s problems were due to “terrible” risk management, suggesting it could be an isolated case.

Still, traders remain very sensitive to signs of any further cracks in the banking system.

“Issues in U.S. banks will remain the dominant influence on the USD in the near term,” Joseph Capurso, a strategist at Commonwealth Bank of Australia, wrote in a client note, pointing to the importance of weekly data on money market flows due later in the day, which “will likely highlight the shift of deposits out of small U.S. banks into large banks.”

The euro drifted 0.1% lower to $1.0834 and sterling edged down 0.12% to $1.23265.

The risk-sensitive New Zealand dollar added 0.13% to $0.6261. Traders continue to price in a quarter point rate increase at the Reserve Bank of New Zealand’s policy meeting next week.

Bitcoin rose to around $27,600, finding its feet following the problems at the world’s biggest cryptocurrency exchange, Binance, which has been sued by the U.S. Commodity Futures Trading Commission (CFTC).

The token had dipped as low as $26,541 on Monday, after its retreat from a nine-month high of $29,380 last week.

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Star Entertainment says Hard Rock-led group weighs bid, shares surge

Published

6 hours ago

May 20, 2024

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Star Entertainment says Hard Rock-led group weighs bid, shares surge

Star Entertainment (SGR.AX), opens new tab said on Monday a consortium led by Florida-based Hard Rock Hotels & Casinos is considering a bid for the cash-strapped Australian firm, sending its shares 20% higher.

A potential takeover by entertainment giant Hard Rock would provide a much-needed financial lifeline to Star, which has been plagued by a regulatory inquiry into its flagship Sydney casino operation and an executive exodus.

Star, which had a market value of A$1.29 billion ($863.66 million) as of Monday’s close, said it has been approached by a consortium of investors which includes Hard Rock Hotels & Resorts (Pacific).

The company said it understands Hard Rock Hotels is a local partner of Hard Rock.

Earlier in the day, Star said it had received “inbound interest from a number of external parties” but flagged none of them had yet resulted in “substantive discussions”.

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Business

Red Lobster seeks bankruptcy protection with $100 mln in financing commitments

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6 hours ago

May 20, 2024

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Red Lobster seeks bankruptcy protection with $100 mln in financing commitments

U.S.-based restaurant chain Red Lobster has filed for Chapter 11 bankruptcy protection in a Florida court after securing $100 million in financing commitments from its existing lenders, the company said on Sunday.

The company listed its assets and liabilities to be between $1 billion and $10 billion, according to a court filing.

Red Lobster said its restaurants will be open and operate as usual during the bankruptcy proceedings, and plans to reduce its locations as well as pursue a sale of substantially all its assets.

The restaurant chain also said it has entered into a “stalking horse” purchase agreement to sell its business to an entity formed and controlled by its existing term lenders.

“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth,” said Jonathan Tibus, CEO of Red Lobster.

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Business

BMW imported 8,000 vehicles into US with parts from banned Chinese supplier, Senate report says

Published

7 hours ago

May 20, 2024

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BMW imported 8,000 vehicles into US with parts from banned Chinese supplier, Senate report says

German automaker BMW (BMWG.DE), opens new tab imported at least 8,000 Mini Cooper vehicles into the United States with electronic components from a banned Chinese supplier, a U.S. Senate report released on Monday said.

A report by Senate Finance Committee Chairman Ron Wyden’s staff said BMW imported 8,000 Mini Coopers with parts from a Chinese supplier banned under a 2021 law and that BMW continued to import products with the banned parts until at least April.

BMW Group said in an email it had “taken steps to halt the importation of affected products.”

The company will be conducting a service action to replace the specific parts, adding it “has strict standards and policies regarding employment practices, human rights, and working conditions, which all our direct suppliers must follow.”

Congress in 2021 passed the Uyghur Forced Labor Prevention Act (UFLPA) law to strengthen enforcement of laws to prevent the import of goods from China’s Xinjiang region believed to have been produced with forced labor by members of the country’s Uyghur minority group. China denies the allegations.

“Automakers’ self-policing is clearly not doing the job,” Wyden said, urging the Customs and Border Protection agency to “take a number of specific steps to supercharge enforcement and crack down on companies that fuel the shameful use of forced labor in China.” Customs and Border Protection did not immediately comment.

The report found that Bourns Inc, a California-based auto supplier, had sourced components from Sichuan Jingweida Technology Group (JWD). That Chinese company was added to the UFLPA Entity List in December, which means its products are presumed to be made with forced labor.

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